UPDATED: Oct. 22 at 12:15 p.m. ET
Optum has filed a motion to have a Maryland fraud case dismissed.
The state's Attorney General Anthony Brown sued Optum in August, alleging that the company defrauded its Medicaid program in providing a faulty computer system for its behavioral health program.
In the filing, Optum argues that the lawsuit should be dismissed as there is a failure to make a claim. The issues in question, the company said, were "resolved years ago on the terms the State itself drafted." When Maryland entered into the partnership with the company, both parties were well aware that the implementation would be complex.
As such, the contract between the two included "a detailed set of tools to manage the transition, adjust payment based on its own assessment of performance, and exercise remedies if performance fell short." The Maryland Department of Health tapped into these tools multiple times through the duration of the contract.
The company said in the filing that because it was not satisfied with the remedies established in the contract, Maryland "now seeks to extort additional penalties" from Optum.
The state paid $126.9 million for the services to manage its Administrative Services Organization between 2019 and 2024, per the original lawsuit. The AG's office argued that the ongoing technology issues cost Maryland "tens of millions of dollars."
"Optum provided a defective system that failed them for years," Brown said in the announcement.
An Optum spokesperson told Fierce that the AG's lawsuit "is inaccurate and misleading in its attempt to transform what is fundamentally a contract dispute, into allegations of fraud."
"We strongly disagree with the Maryland Attorney General's lawsuit, which fails to account for the complexities of the program’s implementation and overlooks Optum’s sizeable commitment and investment to provide a high standard of compliant services for the State," the spokesperson said.
PUBLISHED: Aug. 28 at 3:35 p.m. ET
Maryland Attorney General Anthony Brown has filed a lawsuit against UnitedHealth Group, alleging that its Optum unit defrauded the state's Medicaid program by providing a faulty computer system.
In the lawsuit, Brown's office claims that the system, which was implemented in the state's Medicaid behavioral health program, crashed on its first day in use and ultimately "never functioned properly." The company's contract with the state ran from 2019 to 2024, with the state paying $126.9 million for Optum to manage its Administrative Services Organization program.
The lawsuit also says that the system crash was so severe that the program was forced to take it offline in 2020 for eight months, which put access to its services in jeopardy for 1.5 million Medicaid enrollees. The issues with the system cost Maryland "tens of millions of dollars," the AG's office said.
"Marylanders in crisis and the providers who care for them rely on Maryland’s Medicaid program for essential mental health and substance abuse care," Brown said in a press release. "Optum provided a defective system that failed them for years."
The lawsuit claims that in the final months before the system was rolled out, Optum switched its own proprietary claims management system for one built by a subcontractor. Brown's office alleges that this system was "inadequately tested" and "inadequately vetted."
Because the system did not work as intended, it denied legitimate claims for care, made incorrect payments to providers and failed to identify "rampant, multi-million-dollar fraud."
The state is seeking triple the value of the contract—about $380 million—in damages for the alleged violations of Maryland's False Claims Act. The lawsuit also alleges breach of contract and intentional misrepresentation.
An Optum spokesperson said the company "vehemently disagrees" with the claims in the lawsuit. The spokesperson also emphasized that the contract was directly between Optum and the state, and does not relate to UnitedHealthcare's Medicaid business in Maryland.
"Optum vehemently disagrees with the Maryland Attorney General's lawsuit, which fails to account for the complexities of the program’s implementation and overlooks our sizeable commitment and investment to provide a high standard of compliant services for the State," the spokesperson said.